The dollar has risen more than 7 per cent this year against the currencies of America’s major trading partners. While that may sound positive, a stronger dollar means US goods sold overseas cost more, and imported products are cheaper for Americans.

Donald Trump claims his fiscal policies have solved America’s trade woes — but the picture may be more complicated. Picture: Jim Watson/AFPSource:AFP

That means US companies don’t do so well overseas, which could lead to job cuts.

China is a big part of the problem, with the country manipulating the yuan to keep it low and improve its export market.

Robert Scott, from the Economic Policy Institute, told the Post China had destroyed 3.4 million American jobs, many of them manufacturing roles Mr Trump swore to protect in more rural states.

Mr Trump knows this. He repeatedly said the dollar is “too strong” and during his 2016 presidential campaign vowed to act against China.

But he has not taken action on currencies, instead relying on tariffs and taxes that have the opposite effect.

On Tuesday, the US President threatened additional tariffs on Chinese goods, dashing hopes his meeting with Chinese leader Xi Jinping at the G20 summit in Buenos Aires this week will lead to a de-escalation of tensions.

Mr Trump’s tax cuts and tariffs may not be all good news in the long term. Picture: Alex Brandon/APSource:AP

“Investors didn’t need that sort of wake-up call from the President headed into a major meeting for trade negotiations,” said Robert Pavlik, chief investment strategist and a senior portfolio manager at SlateStone Wealth.

“Investors were looking to the G20 meeting as a lifesaving line, but Trump threw cold water on it by talking too tough on trade.”

They are nervous, he added, buying shares in more stable stocks such as utilities and consumer staples.

There are concerns the trade tensions between the US and China will continue into 2019 — and that could have repercussions for the world.

Economists at Dutch lender Rabobank told The Guardian the global economy could suffer over the next 10 years if the US-China trade war escalates further, with as much as 2 per cent of GDP growth lost by 2030.

The picture is worrying for Mr Trump, who will be relying on strong economic performance in the US to carry him to a second term.

Some economists believe a recession could hit at the precisely the wrong moment for the President, just before the 2020 election.

This is hugely important for Mr Trump, who needs to show the US the money to hold on to his crown.